People and HR measures most commonly used in Social category of metrics
The number of employers in the Asia-Pacific (APAC) region incorporating Environmental, Social, and Governance (ESG) measures in their executive incentive plans went up to 77% in 2023.
This is a 14% hike from the 63% recorded in 2022, according to the latest findings of WTW.
Zhu Xujing, Asia Pacific Leader, Executive Compensation and Board Advisory, WTW, pointed out that the use of ESG measures in executive incentive plans in APAC are "considerably influenced by the level of disclosure requirements" in each country.
Singapore reported the highest percentage of companies that incorporate ESG metrics in their incentive plans, with 93%. Other markets reported:
- Australia (86%)
- Japan (72%)
- Malaysia (63%)
- India (56%)
- Hong Kong (55%)
- China (29%)
"In the region, Australia, Japan and Singapore continue to emerge as market leaders in the disclosure of metrics used and the integration of ESG measures into executive incentives," Zhu said in a media release.
"Although disclosures are not as strong in markets China, Hong Kong, India, and Malaysia, we see leading companies picking up pace in their ESG commitments and aligning business practices with ESG priorities."
By industry, organisations from the consumer staples, energy, financials and utilities were more likely to adopt ESG metrics, according to the official. There are also increases in the use of ESG metrics in the real-estate and communications services, as well as firms in the energy and industrial sectors.
People, HR measures most used in social metrics
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Meanwhile, the report found that People and HR measures, such as employee engagement, remains the most commonly used in the Social category.
Metrics in the Social category saw the most significant increase in APAC after it went up 60% from 47% the year prior. Within the category, 57% of organisations included human capital-related measures in their incentive plans, according to the report.
The use of environmental metric went up to 39% from 28% in 2022, with measures related to carbon or CHG measures being the most used metrics based on company disclosures. The governance metric increase to 36% from the 31% in 2023, according to the report.